1. Technical Field
The embodiments described herein relate to processes for making credit decisions and more particularly to processes for accurately evaluating the creditworthiness of a consumer, organization, family or business applying for a loan or a financial service account when conventional credit history information about the applicant is limited or entirely absent.
2. Related Art
There is great demand for the widespread availability of prudently granted financial credit for individuals, businesses, and other organizations. There is also strong evidence that wide availability of prudently managed credit promotes more efficient capital allocations resulting in improved economic growth and an overall improved human condition.
Credit history information is essential to prudent and efficient lending on any socially significant scale. Such information includes reliable data on the economic condition of prospective borrowers and past behavior of prospective borrowers with respect to borrowing and repayment behavior. In many lending environments, substantial information about credit obligations undertaken, failures to make agreed upon repayments, successful repayment, and defaults (known as “full credit data”) is widely collected and readily available in credit bureaus or within lender or government records. In other lending or potential lending environments, only information on poor or defaulting payment records is available and in yet other environments only little or unreliable information is available, or information is available on only a limited proportion of prospective borrowers. Wherever available credit data is less than full credit data, opportunities to optimize the use of capital are mitigated and there is opportunity to improve.
The availability of credit data is also often limited for specific subpopulations within highly developed economies where full credit data is otherwise widely available. Some nations have limited credit data in general because of strict privacy laws; others because of an immature lending system or disruptions to banking, legal or credit systems. The need for improved credit data and better use of the data available is widespread. It is critical, for example, in poorer countries and those with delayed economic development.
FIG. 8A is a diagram illustrating a conventional decision device 800 that is configured to carry out a conventional credit application review and recommendation process. As can be seen, decision device 800 can comprise a fetch data component 804 configured to access required information from database 806. Database 806 can be configured to store information related to a credit applicant, such as name, address, birthdates, social security number, etc., as well as credit information such as credit bureau scores, etc.
When a new application 802 is received, or more specifically when information related to a new application 802 is input into device 800, then this can cause fetch data component 804 to fetch the relevant data from the database 806 and to generate a credit data package 808, which can be evaluated using various analytics by evaluation device 810. Once the data in the data package 810 has been evaluated, policy rules can be applied by policy rules engine 812 and a decision 814 can be generated.
But as noted, in environments where information about an applicant, especially their credit history, is scares or non-existent, such a conventional device 800 can be of little or even no use in making decisions related to applications 802.